The Los Angeles Employment Development Corp. reports that despite the implosion of the local mortgage industry, Orange County still managed to have 62 major business expansion projects last year. LAEDC defines an expansion as a new lease of commercial real estate worth at least $1 million or involving 20,000 square feet or more o commercial space.

Although O.C.’s projects dropped by 10.1%, they accounted for nearly a third of the 203 expansions in the five-county SoCal region. Business expansions declined 17.5% regionwide pulled down in large part by the Riverside-San Bernardino area, which saw 30% fewer major projects. Other nuggets:

Among cities, Irvine led the five-county area with 21 major projects followed by downtown L.A. at 19.

And only O.C. and Riverside saw an increase in total square footage in 2007. O.C. was up by 138,000 square fee to 3.9 million square feet. Riverside added 1.6 million square feet for total of 5.3 million square feet.

Accounting, law and other professional services expanded the most in the region, with 50 projects, followed by finance and insurance at 20.

Tough economic times, however, are beginning to take their toll. O.C.’s office vacancy rate jumped to 12.5% in the last half of 2007, after several years in the single digits. Riverside-San Bernardino jumped from 7.6% at the end of 2006 to 11.9% last year.

A scarcity of land for development bolstered industrial real estate. O.C. vacancies were at at a tight 4% while L.A. led the country with the lowest rate 1.5%.

The report doesn’t expect any immediate turnaround in business expansions this year:

“With an uncertain economic outlook for Southern California in 2008, businesses will try to delay or limit hiring workers, and will be more cautious in expanding their facilities. In addition,l enders burned by the subprime mess, have become more hesitant about making other types of loans. The ‘Professional Services’ sector will experience moderate job growth in 2008 and will require more office space. The Logistics/Warehousing sector remains strong in Southern California as international trade activity will remain high. This will continue to drive demand in industrial/logistics space development in the Inland Empire, though large blocks of land are starting to get scarce there. One caveat — water supply considerations could crimp development of new projects. Overall, expect a slowdown in major expansion activity to continue in 2008.”

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